Annual Financial Report

12 April 2022

Keller Group plc

Annual Report and Accounts for the year ended 31 December 2021 and Notice of 2022 Annual General Meeting

Keller Group plc (“Keller”, the “Company”) announces that its Annual General Meeting will be held at 9.30am on Wednesday 18 May 2022 (“AGM 2022”) at the offices of DLA Piper UK LLP, 160 Aldersgate Street, London EC1A 4HT.

In connection with this, the following documents have been posted or otherwise made available to shareholders:

· Annual Report and Accounts for the year ended 31 December 2021 ("Annual Report 2021")

· Notice of AGM 2022

· Proxy Form (in the case of shareholders on the register of members)

In compliance with Listing Rule 9.6.1R, copies of these documents have been submitted, where appropriate, to the National Storage Mechanism via the FCA's Electronic Submission System and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism

We have also submitted the Annual Report 2021 in the electronic reporting format required by Disclosure Guidance and Transparency Rule (“DGTR”) 4.1.14R; and the Annual Report 2021 and the Notice of AGM 2022 are now available to view on the Company's website at www.keller.com.

Shareholders should be aware that arrangements for the AGM 2022 may change at short notice. We will give notice of any changes to our arrangements, including venue, as early as possible before the date of the meeting via our website or via a regulatory information service.

Should shareholders wish to ask any questions of the Board relating to the business of the AGM 2022, they are encouraged to email their questions in advance to [e-mail] or send them by post to the Company's registered office for the attention of the Group Company Secretary and Legal Advisor.

In accordance with DGTR 6.3.5R, this announcement contains information in the Appendix about the principal risks and uncertainties, the Directors’ responsibility statement and note 28 to the accounts on related party transactions. This information has been extracted in full unedited text from the Annual Report 2021. This material should be read in conjunction with and is not a substitute for reading the full Annual Report 2021. References to page numbers and notes in the Appendix refer to those in the Annual Report 2021. A condensed set of financial statements was appended to the Keller's preliminary results announcement issued on 8 March 2022.

For further information, please contact:

Keller Group plc

www.keller.com

Kerry Porritt, Group Company Secretary and Legal Advisor   020 7616 7575

Silvana Glibota-Vigo, Group Head of Secretariat

Notes to editors:

Keller is the world's largest geotechnical specialist contractor providing a wide portfolio of advanced foundation and ground improvement techniques used across the entire construction sector. With around 10,000 staff and operations across five continents, Keller tackles an unrivalled 6,000 projects every year, generating annual revenue of more than £2bn.

LEI number:  549300QO4MBL43UHSN10

DGTR 6 Annex 1 Classification:  1.1 (Annual financial and audit reports)

Appendix

Principal risks and uncertainties

The table on the following pages lists the principal risks and uncertainties as determined by the Board that may affect the Group and highlights the mitigating actions that are being taken. The content of the table, however, is not intended to be an exhaustive list of all the risks and uncertainties that may arise.

The COVID-19 pandemic is having and will continue to have an impact across the entire organisation. We have incorporated commentary into affected principal risks and we will continue to manage mitigation centrally as well as regionally. We have also taken account of the impact of climate-related risks and opportunities on our principal risks and uncertainties.

Key: Strategic lever
1	Balanced portfolio	3	Operational excellence
2	Engineered solutions	4	Expertise and scale

Financial risk

Risk	Potential impact	Demonstrable mitigation	Risk movement (since 2020)
Inability to finance our business Insufficient levels of funding, whether from operating cash flow or external financing facilities, that are necessary to support the business. Link to strategic lever: 3  4	A lack of available funds restricts investment in growth opportunities, whether through acquisition or innovation. In an extreme circumstance, the lack of available funds could lead to a failure of the Group to continue as a going concern.	Mixture of long -term committed debt with varying maturity dates which comprise a £375m revolving credit facility with a maturity extended to November 2025 and a US private placement debt of $75m maturing in 2024. The $50m note maturing in 2021 was redeemed from existing facilities. Active and open communication with the revolving credit facility banking group ensures that it understands the Group’s financial performance and is supportive of funding requirements. Strong free cash flow profile with the ability to turn off capital expenditure and reduce dividends. Embedded procedures to monitor the effective management of cash and debt, including weekly cash reports and regular cash flow forecasting to ensure compliance with borrowing limits and lender covenants. Culture focused on actively managing our working capital; the annual bonus plan is linked to executive remuneration through an operating cash flow metric. Please see the Directors’ remuneration report for further information on metrics. Monitoring of and response to external factors that may affect funding availability; as a result of the continued strong cash management, even taking account of the ongoing impact of COVID-19, the Board announced in November 2021 that it expected leverage to be at the bottom end of the 0.5x–1.5x guided range at 31 December 2021.	Constant risk  Link to viability Looking forward, as new facilities are either required or renewed, we will look at ESG-linked funding, alongside traditional funding alternatives.

Market risk

Risk	Potential impact	Demonstrable mitigation	Risk movement (since 2020)
A rapid downturn in our markets Inability to maintain a sustainable level of financial performance throughout the construction industry market cycle, which grows more than many other industries during periods of economic expansion and falls more harder than many other industries when the economy contracts. Link to strategic lever: 1  2	Reduction in the demand for our products and services may lead to a significant deterioration in financial performance, including cash flow generation. In an extreme circumstance, reduced cash flow generation could lead to a failure of the Group to continue as a going concern.	The diverse markets in which the Group operates, both in terms of geography and market segment, provide protection to individual geographic or segment slowdowns. COVID-19 has continued to cause disruption in economic activity in several of the markets in which we operate. Whilst the Group has shown good resilience to this change in 2021, it is likely that COVID-19 will continue to depress the economies in affected markets over the next 12 months. This may cause a reduction in activity in the construction sector which adversely affects the Group’s order book. Having strong local businesses with in-depth knowledge of the local markets enables early detection and response to market trends. Leveraging the global scale of the Group, talent and resources can be redeployed to other parts of the company during individual market slowdowns. The diverse customer base, with no single customer accounting for more than 3% of Group revenue, reduces the potential impact of individual customer failure caused by an economic downturn.	Constant risk  Link to viability As expected, we saw a slight shrinking of the construction market in 2021, with recovery moving at different speeds in each geography. North America was the most advanced in recovery, with Europe in line with expectations and AMEA remaining the most challenging. We will continue to mitigate through our market position across a number of sectors of the construction market and are well placed to take advantage of opportunities, especially in infrastructure. We will continue to monitor this risk closely, paying close attention to any impact on the size of our order book, which has recovered to a record level, and take appropriate mitigating actions.

Strategic risks

Risk	Potential impact	Demonstrable mitigation	Risk movement (since 2020)
Failure to procure new contracts on satisfactory terms Increasing competition, changing customer requirements or a loss of technological advantage results in a failure to continue to win and retain contracts on satisfactory terms and conditions in our existing and new target markets. Link to strategic lever: 1  2  3  4	Failure to negotiate satisfactory and appropriate contractual terms may result in delays and disputes during project delivery, negatively impacting our relationships with our customers and the Group’s reputation for delivering quality products and solutions. Inability to enter into commercially viable contracts may have a negative effect on the profitability of our projects and prevent the Group from achieving its targets.	A focus on understanding customers’ requirements and competitors’ capabilities. Structured bid review processes in operation throughout the Group with well-defined selection criteria that are designed to ensure we take on contracts only where we understand and can manage the risks involved. The Project Lifecycle Management (PLM) Standard has introduced more rigour into how risks are considered during the opportunity, contract approval and project execution phases. Sales training, which includes a focus on contractual and commercial terms.	Increased risk Our business depends on purchasing materials efficiently and in a timely manner, linked to project execution. COVID-19 continues to disrupt supply chains, putting pressure both on the continuity of supply and also on pricing. Fluctuations in these costs cannot always be passed on in full to the customer, especially with increased competition for a reduced number of contracts, which puts pressure on bid pricing. Our focus on maintaining our supply chain and managing material price risk for our critical materials is actively managed through our business unit procurement teams.
Losing our market share Inability to achieve sustainable growth, whether through acquisition, new products, new geographies or industry-specific solutions, may jeopardise our position as the preferred international geotechnical specialist contractor. Link to strategic lever: 1  2	Delivering sustainable growth is a key component of our strategy. Failure to deliver on our key strategic objective may result in the loss of confidence and trust of our key stakeholders including investors, financial institutions and customers.	A clear business strategy with defined short, medium and long-term objectives, which is monitored at local, divisional and Group level. Continued analysis of existing and target markets to ensure opportunities that they offer are understood. An opportunities pipeline covering all sectors of the construction market. A wide-ranging local branch network which facilitates customer relationships and helps secure repeat work. Continually seeking to differentiate our offering through service quality, value for money and innovation. North American businesses reorganisation delivering on cross-selling opportunities. However, due to COVID-19 there is an ongoing economic squeeze globally, increasing pressure on volume/market share. Minimising the risk of acquisitions, including getting to know a target company in advance, often working in a joint venture, to understand the operational and cultural differences and potential synergies, as well as undertaking these through due diligence and structured and carefully managed integration plans.	Constant risk  Link to viability While we are seeing improvement across the US, selling a whole range of services not previously offered in regions before One Keller was implemented, due to COVID-19 there is an economic squeeze globally, increasing pressure on volume/market share. This is being somewhat offset by focused, targeted M&A activity. The focus on sustainability continues to increase from both government and private clients and we are well placed to take advantage of opportunities supported by our wide product offering.
Ethical misconduct and non-compliance with regulations Keller operates in many different jurisdictions and is subject to various rules, regulations and other legal requirements including those related to anti-bribery and anti-corruption. There is a risk that the Group fails to maintain the required level of compliance. Link to strategic lever: 3  4	Non-compliance with relevant laws and regulations could lead to substantial damage to Keller’s reputation and/or large financial penalties. Losing the trust of our customers, suppliers and other stakeholders would have an adverse effect on our ability to deliver against our strategy and business objectives.	A Code of Business Conduct that sets out minimum expectations for all colleagues in respect of ethics, integrity and regulatory requirements and is backed by a training programme to ensure that it is fully embedded across the Group. A clear and confidential externally run ‘whistleblowing’ facility encouraging employees to report any suspected misconduct. An Ethics and Compliance Officer at every business unit who supports the ethics and compliance culture and ensures best practice developed by the Group is communicated and embedded into local business practices. Regular workshops across the Group to ensure compliance risks are identified and addressed.	Constant risk  Link to viability Strengthened communication of Keller’s tone at the top and a renewed focus on risk management and internal control have maintained the exposure of this risk. Refresher training on code of conduct taking place across the Group.
Inability to maintain our technological product advantage Keller has a history of innovation that has given us a technological advantage which is recognised by our clients and competitors. Inability to maintain this advantage through the continued technological advancements in our equipment, products and solutions may impact our position in the market. Link to strategic lever: 1  2	Without a structured innovation approach, including sufficient investment, Keller may lose its competitive advantage.	Innovation initiatives developed at both Group and divisional level to ensure a structured approach to innovation is in place across the Group. Keller’s continued investment in both external and internal equipment manufacture. Global product teams set standards, provide guidance and disseminate best practice across the Group. Digitisation initiatives focusing on strategy of facilitating equipment and operational data capture, bringing information together and making it accessible on a single platform. It will include all technical information from Keller and third-party sources at each stage of delivery, including data analysis and visualisations where possible, and it will also be BIM-compatible.	Constant risk
Changing environmental factors Changes in environmental legislation and relevant standards that impact our product and service offerings and an increasingly active public response to environmental concerns in the sectors in which we operate. Link to strategic lever: 3	Inability to achieve Keller’s commitment to deliver solutions in an environmentally conscious manner may have a negative impact on our reputation, affect employee morale and lead to loss of confidence from our customers, suppliers and investors. Product offerings become obsolete because they are no longer compliant with environmental standards. We may be required to remediate at our own cost to maintain compliance.	Collaboration with the University of Surrey’s Centre for Environment and Sustainability to apply sustainability best practice to all business functions. The Sustainability Steering Committee is responsible for integrating sustainability targets and measures into the Group business plan to successfully drive changes important to the company. Scope 1 and 2 carbon emissions verified by accredited external third party (Carbon Intelligence). Carbon calculator tool used to identify/improve carbon efficiency. Project team created to develop processes to meet Task Force on Climate-related Financial Disclosures (TCFD) requirements. Further details can be found in the ESG and sustainability section on pages 42 to 67.	Increased risk While the focus around environmental legislation is increasing, we believe this will also present opportunities to us that we are well placed to exploit. Our increasing activity to improve sustainability will put us in a good position to compete with our peers as opportunities arise. We have now put in place targets for Scopes 1, 2 and 3. For Scope 3, the target covers transportation of materials, business travel and waste disposal. We have also developed a process to capture climate-related risks and opportunities in line with TCFD reporting requirements and now have a climate-related risk and opportunity register.

Climate-related risks and opportunities

Climate change is a global threat and, as such, will continue to have many impacts across our business over the short (1 year), medium (2–5 years) and long term (6–30 years). Nonetheless, we believe there are also many opportunities as we, and the rest of the world, look to decarbonise. We fully support the aims of the TCFD and are using this framework to record and communicate the impacts of climate change on our business. We also use this to improve our disclosure of climate-related financial information. Please see our TCFD dashboard on page 52 for further information. An update on significant climate-related risks and opportunities is provided below:

Physical-Acute	Transition
	Policy and Legal	Market
Flooding, drought, heavy precipitation and other extreme weather events, which are expected to increase over the medium and long term, can affect our ability to conduct geotechnical projects. Forest fires have impacted our Australian and Western North America business, directly delaying projects in this area, which could lead to lost revenue. Flooding in Europe also delayed projects in that region. These events may also cause harm to our employees as well as damage to our buildings, yards and equipment. Our management and project teams take a view on the risk factors that might adversely impact their ability to successfully deliver any given project. These are formalised within the Group-wide PLM Standard. Keller continues to offer new and sustainable techniques for working in our markets. See pages 47, 49 and 51 for more details. Where these markets are exposed to acute or chronic climate extremes, our design skills, global reach and product range enable us to deliver some of the most complex projects in the industry. We believe these factors set us apart from our competitors and therefore also present an opportunity. We will look at these impacts, alongside chronic physical impacts, in more detail with scenario analysis modelling later in 2022.	Current and emerging legislation could impact our financial performance over the medium term. As governments introduce carbon taxes and other legislation, operating costs and the costs of raw materials may increase. Keller is committed to reducing the carbon intensity of our work, which will aid mitigation of the impact of any laws or regulations. For more details on what Keller is doing, please refer to page 47.	There is a risk that our customer base contracts and switches to our competitors over the medium or long term as a result of not responding to client demand for lower-carbon solutions. This could prove more costly for projects related to the climate transition, such as flood defence projects. More carbon-intensive projects, such as those using jet grouting, may see a decrease in client demand. Keller has therefore developed a number of more sustainable construction solutions which will help mitigate these market risks. For example, Keller’s vibro stone column solution can be used instead of the traditional continuous-flight auger piling; this technique can reduce the embodied carbon dioxide produced by up to 90%. Most of this saving is achieved by replacing the use of concrete and reinforced steel, which have high embodied carbon, with lower embodied carbon stone aggregate. To highlight the benefits of these lower embodied carbon techniques, we use the European standardised EFFC-DFI carbon calculator to demonstrate the carbon savings from alternative solutions.

Operational risks

Risk	Potential impact	Demonstrable mitigation	Risk movement (since 2020)
Service or solutions failure In designing a product or a solution for customers, many factors need to be considered including client requirements, site and loading conditions and local constraints (eg neighbouring buildings, other underground structures). Inadequate design of a customer product and/or solution may lead to an inability to achieve the required standard. Misinterpretation of client requirements or miscommunication of requirements by the client may lead to a poorly designed solution and consequently failure. Link to strategic lever: 2  4	Failure to meet quality standards could damage our reputation, result in regulatory action and legal liability, and impact financial performance. The liability limitation period of our products is generally 12 years; consequently, a poorly designed product/solution could have an impact on our long-term profitability.	Continuing to enhance our technological and operational capabilities through investment in our product teams, project managers and our engineering capabilities. Employing geotechnical engineers that are focused purely on design. Disaster Recovery/Business Continuity Plans in place and reviewed across the Group. The global product teams set standards, provide guidance and disseminate best practice across the organisation for our eight key products. We seek to agree liability limits in our contracts with customers. Insurance solutions are in place to limit financial exposure of a potential customer claim.	Constant risk  Link to viability
Ineffective execution of our projects Failure to manage our projects to ensure that they are delivered on time and to budget due to unforeseen ground and site conditions, weather-related delays, unavailability of key materials, workforce shortages or equipment breakdowns. Link to strategic lever: 3  4	Inability to successfully deliver projects in line with the agreed customer requirements may result in cost overruns, contractual disputes and reputational damage. Ineffective project delivery may also expose the Group to long-term obligations including legal action and additional costs to remedy solution failure.	Ensuring we understand all of our risks through the bid appraisal process and applying rigorous policies and processes to manage and monitor contract performance. Ensuring we have high-quality people delivering projects. Keller’s Project Management Academy and Field Leadership Academy are designed to create project managers with a consistent skill set across the entire organisation. The academies cover a broad range of topics including contract management, planning, risk assessment, change management, decision-making and finance. Keller Data Acquisition (KDAQ) system enabling comparison of performance across sites using similar products, identification of areas of best practice and quickly raising awareness of where improvement is needed. Safety Standards for operations (eg platform, cage handling), Equipment Standards and fleet renewal. The PLM Standard aims to drive a consistent approach to project delivery with robust controls at every project phase. A formal, structured approach to Lean and 5S is being rolled out across the organisation, which is improving processes and strengthening Keller’s working culture.	Constant risk  Link to viability
Causing a serious injury or fatality to an employee or a member of the public Failure to maintain high standards of health and safety, and an increase in serious injuries or fatalities leading to an erosion of trust of employees and potential clients. Link to strategic lever: 3	Inability to maintain a positive health and safety culture may lead to damage to morale, an increase in employee turnover rates and a decrease in productivity. Deterioration in health and safety performance may lead to loss of customer, supplier and partner confidence and damage to our reputation in an area that we regard as a top priority.	Board-led commitment to drive health and safety programmes and performance with a vision of zero harm. An emphasis on safety leadership to ensure both HSEQ professionals and operational leaders drive implementation and sustainment of our safety standards through ongoing site presence, using safety tours, safety audits, safety action groups and mandatory employee training. Ongoing improvement of existing HSEQ systems to identify and control known and emerging HSEQ risks, which conform to internal standards. Incident Management Standard and incident management software driving a robust and consistent management process across the organisation that ensures the cause of the incident is identified and actions are put in place to prevent recurrence.	Constant risk  Link to viability
Not having the right skills to deliver Inability to attract and develop excellent people to create a high-quality, vibrant, diverse and flexible workforce. Link to strategic lever: 2  3  4	Failure to maintain satisfactory performance in respect of our current projects and failure to deliver our strategy and business targets for growth.	Continuing to invest in our people and organisation in line with the four pillars of the Keller People agenda as noted below. Ensuring that the ‘Right Organisation’ is in place with people having clear accountabilities; each organisational unit is properly configured with a matrix of line management, functional support and product expertise. As an industry leader, that Keller is made up of ‘Great People’ that are well trained, motivated and have opportunities to develop to their full potential. Project managers and field employees receive comprehensive training programmes which cover a broad range of topics including contract management, planning, risk assessment, change management, decision?making and finance. A strong focus on the ‘Exceptional Performance’ of employees in delivering commercial outcomes safely for Keller based upon project successes for our customers. Business leaders are incentivised to deliver their annual financial and safety commitments to the Group. The ‘Keller Way’ provides guidance to the company’s employees and leaders to comply with local laws and work within Keller’s values and Code of Business Conduct.	Increased risk We are seeing increased competition for skilled personnel as well as inflationary pressure on pay across many locations where Keller operates. This is leading to increased risk around recruiting and retaining staff with the right skills to deliver.
Risk of potential disruption in the business operations, reputational damage and/or loss or corruption of data through external or internal technical threats and malicious action Information security and cyber threats are a concern across industries worldwide. The introduction of digital solutions such as InSite and KDAQ increases the Group’s reliance on IT and its inherent cyber risk exposure. Link to strategic lever: 3  4	Cyber security breach could result in leakage of proprietary information, operational disruptions, and loss of employee and customer data.	Building a cyber security and information assurance team and services. Building a zero trust layered technology capability. Creation of an Information Security Management System framework, referencing industry standards to ensure appropriate governance, control and risk management and then onward management for compliance, maturity and development of service. Introduction of technical capabilities and services to further enable prevention, detection, prediction and response services. Multi-factor authentication for all users prevents unauthorised access to Keller’s networks and applications. Advanced threat protection on all IT equipment delivers comprehensive, ongoing and real-time protection against viruses, malware and spyware. Data protection framework to ensure compliance with the General Data Protection Regulation (GDPR) and other standards of data protection.	Constant risk  The threat landscape continues to evolve each year and so we continue to adapt our monitoring, detection, prevention and education processes to maintain a balanced risk perspective. We assess cyber risks and determine appropriate actions for our business. Existing capabilities continue to be deployed and enhanced if needed. As an example, having seen over the last two years the rise in the number of ransomware attacks and the increased number of reported attacks that target backup as well as production environments across all industries, we have implemented a backup solution for key services that is immutable and cannot be encrypted.

Responsibility statement of the Directors in respect of the Annual Report and the financial statements

We confirm that to the best of our knowledge:

-       the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation as a whole; and

-       the Strategic report and the Directors’ report, including content contained by reference, includes a fair review of the development and performance of the business and the position and performance of the company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

The Board confirms that the Annual Report and the financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Group’s position and performance, business model and strategy.

Related party transactions

Transactions between the parent, its subsidiaries and joint operations, which are related parties, have been eliminated on consolidation. Other related party transactions are disclosed below:

Compensation of key management personnel

The remuneration of the Board and Executive Committee, who are the key management personnel, comprised:

	2021 £m	2020 £m
Short-term employee benefits	8.2	8.3
Post-employment benefits	0.3	0.4
Termination payments	0.4	0.4
	8.9	9.1

Other related party transactions

As at the year end there was a net balance of £0.1m owed by (2020: £0.1m owed by) the joint venture. These amounts are unsecured, have no fixed date of repayment and are repayable on demand.